Labour leader David Shearer has defended his decision to muzzle his MPs from commenting on leadership issues, saying it is time move on.

''We have had our discussion in caucus. As far as I am concerned that is ruled off,'' he said during a visit to a low-cost housing development in Wellington to promote his party's new housing policy.

The party's 34 MPs yesterday unanimously backed leader David Shearer after he called an urgent vote to put speculations of a challenge by David Cunliffe to rest.

Cunliffe was stripped of his economic development portfolio and banished from fifth on the front bench to the unranked back bench for repeatedly refusing to back Shearer at last weekend's annual conference.

Shearer said Cunliffe was not talking to the media and he wanted the focus on issue such as housing and jobs.

''We want to talk about what is important. not our own internal squabbles. On this particular issue we will rule off, move on.''

Finance spokesman David Parker would temporarily take over the economic development role, assisted by Clayton Cosgrove, pending a wider reshuffle.

Shearer said his major strength was being able to bring a team together to win the next election.

''Unfortunately there has been a lot of undermining of that leadership. We want to put that to bed. I have said that and made that very clear yesterday.''

He said Cunliffe's electoral committee complaint, aimed at comments against Mr Cunliffe by other Labour MPs, would go to the party's ruling council.

Labour's housing policy, which was the main focus of Shearer's keynote address to the party conference last weekend, would see 100,000 homes built over 10 years at an average cost of $300,000 to $350,000 and then on sold to first time buyers.

'PUBLIC WAR'

Prime Minister John Key has used Labour's leadership woes to take a pot shot at the party.

Speaking to reporters in Cambodia, Key late last night waded into drama, declaring: "Labour are in a war that has now broken out in public."

"They fundamentally do not like each other, they fundamentally do not trust each other."

Key said he's happy to go "up against" Shearer in the 2014 election, but said he wouldn't "bet the ranch" on him remaining leader that long.

The leadership saga was not "helping or hurting" National.

"They are focused on themselves and we are focussed on the country. We are more stable, my caucus are unified behind me, we have solid coalition partners... they can't even organise a conference."

Cunliffe's New Lynn electorate branch is considering a formal complaint to the party over comments made by his fellow MPs about his actions at the conference.

New Lynn electorate secretary Greg Presland today said Cunliffe's ranking and portfolio was a matter for Shearer.

"But there are aspects about what has happened in the last few days that have caused us concern," he told Radio New Zealand.

"I personally think some of them had been unfair. I sat with David for most of the conference and I certainly didn't see anything he did that was wrong."

Cunliffe had the right not to say who he would vote for in an upcoming vote in February as every MP was expected to consult with their electorate branches, Presland said.

There was an element within Labour that was trying to "sabotage" Cunliffe's reputation for some time, he said.

"I'm still struggling to find evidence about it."

There had been suggestions Cunliffe also undermined former leader Phil Goff during the last election campaign.

"The evidence there is Goff not recalling a figure during a debate. It seems to me Phil just forgot the figure, the figure had been available for months but somehow a simple mistake like that is converted into evidence David is trying to undermine him."